Cheap Custom-Made Versions of High-Cost Drugs Spur Backlash

By Melanie Evans on 9/9/2018

A new kind of drugmaker is emerging to meet demand for lower-priced medicines by custom-making drugs, sparking pushback from federal health regulators and legal challenges from traditional pharmaceutical companies.

These companies are marketing cheaper versions of brand-name drugs but they differ from traditional generic-drug makers because they operate much like pharmacies that mix their own medicines, though often in larger quantities. That allows them to skip the regulatory approval process through which traditional drugmakers must prove safety and efficacy of their medicines.

Companies selling custom-made versions of costly drugs—a practice known as “compounding”—say they are meeting demand for alternatives to high-priced drugs.

Athenex Inc. (ATNX +0.19%) in Buffalo, N.Y., last month began marketing a compounded alternative to blood-pressure medication Vasostrict, which the company said it sells for up to 35% less than the branded version. A typical dose of Vasostrict can list for as much as $836, according to wholesale-acquisition cost data from Elsevier’s Gold Standard Drug Database.

The U.S. Food and Drug Administration is taking steps that could stymie compounders’ push...